Mainstreet Equity Corp. Achieved 14th Consecutive Quarter of Double-digit Growth in Q2 2025
Bob Dhillon, Founder and Chief Executive Officer of Mainstreet, said, 'Even in the face of significant economic uncertainty, Mainstreet remains in a position of strength, and we believe these economic challenges may create major opportunities for Mainstreet to exploit. We have shored up significant cash reserves to take advantage of these challenges, continuing our decades-long legacy of countercyclical growth.' He continued, 'In the face of this uncertainty, now more than ever we remain deeply committed to Mainstreet's role as a critical supplier of affordable living amid the current inflationary period.'
The Mainstreet Mission: We are passionately committed to our role as a crucial provider of quality, affordable homes for Canadians, offering renovated apartments and customer services at an average mid-market rental rate of $1200.
We believe the current operating environment, including an ongoing trade dispute with the U.S., presents the opportunity for counter-cyclical accelerated acquisitions in fiscal 2025 and 2026, potentially paving the way for a new phase of continuing growth at Mainstreet.
Key Metrics | Q2 2025 Performance Highlights
Rental Revenue
From operations
Up 12% to $68.6 million (vs. $61.2 million in Q2 2024)
From same asset properties
Up 7% to $63.6 million (vs. $59.3 million in Q2 2024)
Net Operating Income (NOI)
From operations
Up 15% to $42.7 million (vs. $37.3 million in Q2 2024)
From same asset properties
Up 10% to $39.8 million (vs. $36.2 million in Q2 2024)
Funds from operations (FFO) 1
FFO-before current income tax
Up 14% to $23.6 million (vs. $20.7 million in Q2 2024)
FFO per basic share-before current income tax
Up 14% to $2.53 (vs. $2.22 in Q2 2024)
FFO-after current income tax
Up 16% to $22.0 million (vs. $19.0 million in Q2 2024)
FFO per basic share-after current income tax
Up 16% to $2.36 (vs. $2.04 in Q2 2024)
Operating Margin
From operations
62.3% (vs. 60.9% in Q2 2024)
From same asset properties
62.5% (vs. 61.0% in Q2 2024)
Unstabilization rate
12% (providing potential for future NOI growth)
Stabilized Units
427 properties (16,259 units, 12%) out of 481 properties (18,451 units)
Net (Loss) Profit
Net profit (Loss) per basic share
Net profit of $91.5 million (vs. profit of $33.6 million in Q2 2024, including change in fair value of $84.4 million in Q2 2025 vs. $20.4 million in Q2 2024)
Total Capital Expenditures
$8.3 million (vs. $7.2 million in Q2 2024)
Total Capital Expenditure (unstablized assets)
$1.4 million (vs. $1.1 million in Q2 2024)
Total Capital Expenditure (stablized assets)
$6.9 million (vs. $6.1 million in Q2 2024)
Vacancy rate
From operations
4.6% (vs. 3.2% in Q2 2024)
From same asset properties
4.6% (vs. 3.2% in Q2 2024)
Vacancy rate as of May 6, 2025
4.5% excluding unrentable units
Total Acquisition
During Q2 2025
$0.9 million 1 commercial building (vs. $31.9 million 255 units in Q2 2024)
Subsequent to Q2 2025
182 unit ($15.5 million, $85,000 per suite) in Alberta
Total YTD Acquisition 2025
299 units ($34.3 million)
Total Units
As of March 31, 2025
18,502 units 2 (vs. 18,455 units in 2024)
As of May 6, 2025
18,683 units 3
Fair Market Value
Up 2% to $3.6 billion (vs. $3.4 billion in 2024)
Expand
1 See 'Non-IFRS Measures' and Note (1) in MANAGEMENT'S DISCUSSION AND ANALYSIS to the table titled 'Summary of Financial Results' for additional information regarding FFO and a reconciliation of FFO to net profit, the most directly comparable IFRS measurement.
2 Include 51 units held for sale
3 Include 50 units held for sale
Business Strategy
The Q2 results once again demonstrate the continued success of our business model allowing us to deliver compounding shareholder returns no matter where we are in the economic cycle – including the challenges we see today.
Mainstreet has tackled this adversity head on: we have shored up liquidity by temporarily pausing acquisitions in the face of the current market volatility. This ensures Mainstreet will be in a strong position to take advantage of this challenging economic environment with access to additional liquidity ($460 million in 2025). Counter-cyclical investment opportunities may arise and this cautious but this intentional move positions Mainstreet to capitalize on these emerging opportunities. By targeting underperforming assets in Western Canada, particularly mid-market, and optimizing them through our proven value-add model, we aim to enhance shareholder value and meet the growing demand for affordable rental housing across Canada. In addition to strategic acquisitions, Mainstreet may also buy back its shares under the existing normal course issuer bid (NCIB) when it believes that its stock is trading below NAV.
Highly affordable rent: With an average mid-market rent of $1200, Mainstreet is able to reach a significant population in need of housing options, providing stable and inelastic demand even at a time of uncertainty and inflation.
Organic growth without Dilution: We continue to adhere to our policy of 100% organic, non-dilutive growth which continues to generate strong returns over 25 years.
Portfolio Diversity: Mainstreet is largely insulated from significant economic shock in any one market due to having 18,683 units which are located in four provinces across Western Canada, with 43% of its NAV in BC. Mainstreet's properties are clustered around key urban areas – from transit hubs to inner city living areas – and present significant opportunities for maturation.
Positive Market Fundamentals Remain
Mainstreet is positioned to see strong demand across its holdings. Despite 12% of Mainstreet's assets being unstabilized, vacancy rates in many of our key markets remain around historic lows, including Edmonton (4.5%), Saskatoon (2.8%), Regina (5.3%) and BC (3.8%). Mainstreet's overall vacancy rate increased from 3.2% in Q2 2024 to 4.6% in Q2 2025, which increase can, in part, be credited to seasonal trends in the housing market. There are also economic impacts from a cooling rental market in Vancouver & the lower mainland, in addition to economic and new supply pressures impacting the Calgary (6.7%) market. Both of these rental markets are expecting a slower growth or slight decline in rental revenue in the remaining 2 quarters in FY 2025. Despite this, Mainstreet believes that the overall rental housing market in Western Canada remains strong.
According to the Canada Mortgage and Housing Corporation (CMHC), the average rent for a two-bedroom apartment is still expected to rise in 2025 to an average of $1,637 in Edmonton, $1,962 in Calgary, and $1,575 in Saskatoon, driven by ongoing affordability pressures in the homeownership market and a stagnant supply of rental units.
Population growth continues to be a significant driver of rental demand. Although Canada's population growth slowed to 0.2% in Q4 2024—the slowest pace since the pandemic—this moderation follows a substantial annual population increase of 1.8%, adding 744,324 people in 2024. Alberta, for the same period, is still seeing positive growth in both interprovincial migration and net inflow of non-permanent residents, and had population growth of 0.6% in Q4 2024, and 3.5% annually according to Stats Canada. Such demographic trends are expected to sustain demand for rental accommodations at the Mainstreet average mid-market rental unit price of $1200 per month, particularly in urban centres where housing supply remains constrained and vacancies are at low levels,
Challenges
Tariffs
Ongoing volatility in global trade policy has introduced several challenges, including uncertainty across supply chains which have significant implications for construction costs and broader economic stability. While Mainstreet remains shielded from direct pricing impacts – given our focus on value-add repositioning rather than new builds—smaller-scale projects may face moderate cost pressures.
Our diversified sourcing strategy continues to support cost efficiency, but the risk of escalating trade disputes poses broader macroeconomic concerns, including impacts on growth, employment, and inflation. However, rising costs could further tighten housing supply, potentially deepening Canada's supply-demand imbalance in the rental market – a dynamic that may support continued rent growth in our core markets.
International Students
Recent policy changes aimed at reducing non-permanent resident numbers have led to a decrease in international student populations, which could affect rental demand in certain markets where Mainstreet operates. International students have acted as a stabilizing force in Canada's rental ecosystem – and a reduction in those numbers could impact vacancy rates. While the federal government has plans to curb immigration rates in coming years (by 10% for international students in 2025), overall intake levels are expected to remain relatively high. There is some insulation, however, as a significant number of international students remain in Canada, and while it has been reduced, a large number of students are welcomed into Canada each year. As a result, we believe that the demand for rental apartments will remain strong.
Immigration
New Canadians make up a part of Mainstreet's rental base. With federal immigration policy set to change, placing further restrictions on newcomers, Mainstreet anticipates that there will be an overall decrease in the number of potential renters. However, with nearly three quarters of a million newcomers in 2024 alone, it is likely there will continue to be a strong demand for mid-market housing units, which make up the bulk of Mainstreet's assets, and Mainstreet does not anticipate these changes to have a negative material effect on vacancy rates.
Taxation
While we welcomed the end of the federal carbon tax, which was set to increase to more than $95/tonne this year, municipal property taxes remain a persistent inflationary cost. Significant increases to municipal taxation have taken place in jurisdictions across Mainstreet's holdings, including significant increases in Calgary and Edmonton. In addition, we have seen nearly 20% (18.2%) increase in utility fees in Vancouver.
Outlook
Q2 has and will present some challenges for Mainstreet. However, over the past 25 years, Mainstreet has a track record of turning challenges into opportunities and stay focused on our value creation strategy. As a result, management believes there is a positive outlook for Mainstreet's growth and continued performance despite a 1.4% year over year increase in vacancy rates for our properties.
Our business model, together with a nimble management approach, provides Mainstreet the flexibility to create counter-cyclical investment opportunities which allow us to capture market opportunities for both add value assets. Our cautious approach to the economic headwinds brought on by trade disputes and tariff uncertainly has provided us with upwards of $460 million in liquidity in 2025 which can be utilized to seize opportunities – including by buying back our shares through an opportunistic NCIB. Management believes our stocks are currently trading below NAV.
CMHC projects that housing starts will slow from 2025 to 2027, primarily due to decreases in condominium apartments, some of which historically have become rental units. This anticipated supply constraint, coupled with persistent demand, reinforces the strategic importance of our countercyclical investment approach.
The combination of sustained population growth, increasing average rent prices, and a housing supply consistently slow to respond to demand suggests continued opportunities for growth and value creation.
This creates a favourable tailwind for Mainstreet, underpinned by strong demographic trends and immigration. Despite some of the policy changes targeted towards international students and newcomers, there is expected to be continued pressure on housing and rental markets across Canada in the short and long term. This pressure is a contributing factor to the same-asset NOI increase of 10%.
In addition, over the last few quarters, Mainstreet has seen some relief on the largest expense. Interest rates have decreased by approximately 100bps since a year ago and are projected to continue to drop after as the Bank of Canada attempts to restart a slumping economy facing significant headwinds after a decade of stagnation. This has already resulted in a reduction of Mainstreet's borrowing costs compared to a year ago, and ultimately means significant savings on existing debt holdings.
Growth in Western Canada
Despite the temporary strategic pause in acquisitions this quarter, Mainstreet has continued to grow its footprint in Western Canada. Already adding 299 more units this year, we plan to continue to grow our footprint across Manitoba, Saskatchewan, Alberta and BC. The BC market, which made up nearly half of our acquisitions in 2024, currently represents 43% of our net asset value (based on IFRS), and is expected to continue to have low vacancy rates and persistently high rents across the lower mainland, despite the minor retraction we have seen in recent quarters.
Alberta continues to lead Canada in growth, adding more than 200,000 residents last year. This sustained growth has put increasing pressure on rental spaces across both Calgary and Edmonton with rents in both cities expected to continue to grow, with vacancies remaining at a low level.
Saskatchewan and Manitoba have each seen moderate growth and continue to be a reliable stable market for Mainstreet.
The trends found in these provinces are clear examples of how systemically Canada's housing market is undersupplied. Since 2005, Canada's population has grown by 9.4 million to 41 million, while rental supply has only grown by 527,736 to 2.4 million, according to Stats Canada.
We expect that this housing crunch will continue to drive policy changes like municipal re-zoning efforts, as seen in both Calgary and Surrey. Both cities have passed significant re-zoning polices to encourage more density, and we understand that both municipalities are considering extending height limits, or in the case of Vancouver, removing 'view cone' restrictions.
These policy changes and initiatives closely align with Mainstreet's plan to leverage more than 900 low-density buildings – including those on subdividable residual lands – to extract added-value out of existing assets and additional lands at fractional costs.
The three point plan to accomplish this is:
Turning unused or residual space within existing buildings into new units (YTD 55 additional units created)
Exploring zoning and density relaxations to potentially build new capacity within existing footprints
Subdividing residual lands for future developments
This strategy is a potential source of long-term organic non-dilutive growth, and is designed to leverage our strong business model to generate meaningful value for our investors, backed with tangible and money-generating assets.
Organic Runway
Pausing acquisitions to increase liquidity: To respond effectively to the current economic moment, we have paused Q2 asset acquisitions to focus on stabilizing and growing our liquidity, currently estimated at over $460 million, so that we are ready to go back to the market for further acquisition and growth.
Increasing net NOI: Despite slowing economic trends and political uncertainty, Mainstreet continues to generate value by growing NOI, with a specific focus on same-asset NOI and stabilized units. As of the quarter end, 12% of our portfolio remains unstabilized.
Buying back shares: Mainstreet's strong liquidity position provides us with the flexibility necessary to unleash our capital in this countercyclical opportunity to buy back shares under our existing NCIB on an opportunistic basis to further increase shareholder value. Management believes our stocks are currently trading below NAV.
Creating value from existing footprints: We continue to explore opportunities to create larger returns from existing Mainstreet properties through municipalities that have eased zoning restrictions, through subdivisions and optimized residual space.
Forward-Looking Information
Certain statements contained herein constitute "forward-looking statements" as such term is used in applicable Canadian securities laws. These statements relate to analysis and other information based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. In particular, statements concerning estimates related to future acquisitions, dispositions and capital expenditures, increase or reduction of vacancy rates, increase or decrease of rental rates and rental revenue, future income and profitability, timing of refinancing of debt and completion, timing and costs of renovations, increased or decreased funds from operations and cash flow, the Corporation's liquidity and financial capacity, improved rental conditions, future environmental impact the Corporation's goals and the steps it will take to achieve them the Corporation's anticipated funding sources to meet various operating and capital obligations and other factors and events described in this document should be viewed as forward-looking statements to the extent that they involve estimates thereof. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions of future events or performance (often, but not always, using such words or phrases as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and should be viewed as forward-looking statements.
Such forward-looking statements are not guarantees of future events or performance and by their nature involve known and unknown risks, uncertainties and other factors, including those risks described in the Corporation's AIF, dated December 5, 2024 under the heading 'Risk Factors', that may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, the effect of inflation on consumers and tenants, the effect of rising mortgage and interest rates on the Corporation, including its financing costs, challenges related to up-financing maturing mortgages or financing of clear titled assets after stabilization, disruptions in global supply chains, labour shortages, the length and severity of geopolitical conflict and the occurrence of additional global turmoil and its effects on global markets and supply chains, changes in government policies regarding immigration and international students, cyber-incidents Corporation (including the effect of the cybersecurity incident which occurred on May 2, 2024), costs and timing of the development or renovation of existing properties, availability of capital to fund stabilization programs, other issues associated with the real estate industry including availability of labour and costs of renovations, supply chain issues, fluctuations in vacancy rates, general economic conditions, trade policies and tensions, including changes in, or the imposition of tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, competition for tenants, unoccupied units during renovations, rent control, fluctuations in utility and energy costs, carbon tax increases, environmental and other liabilities, effects of climate change, credit risks of tenants, availability of capital, changes in legislation and regulatory regime applicable to the corporation, loss of key personnel, a failure to realise the benefit of acquisitions and/or renovations, the effects of severe weather events on the Corporation's properties, climate change, public health measures (including travel and post-secondary restrictions), uninsured losses, fluctuations in the capital markets and the trading price of the Common Shares, conflicts of interest of the Corporation's directors and officers, and other such business risks as discussed herein. This is not an exhaustive list of the factors that may affect Mainstreet's forward-looking statements. Other risks and uncertainties not presently known to the Corporation could also cause actual results or events to differ materially from those expressed in its forward-looking statements.
Forward-looking statements are based on management's beliefs, estimates and opinions on the date the statements are made, and the Corporation undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions should change except as required by applicable securities laws. Management closely monitors factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements and will update those forward-looking statements where appropriate in its annual and quarterly financial reports.
Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding the Corporations reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.
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